Transcript Slide 1

The Spirit Level findings and
why they matter
Redistribution of wealth a question of social power
21st May 2012
Sue Christoforou
www.equalitytrust.org.uk
1
What we’re going to look at
• The Spirit Level
• Link between income inequality and health and social
outcomes
• How do countries compare?
• Is it a causal explanation?
• What can be done?
• Myths about greater equality
2
The Spirit Level
• Synthesis of about 30 years of accumulated research into poor
health and social outcomes associated with inequality
• Consistent set of 23 developed world countries were used
throughout the study
• Richest 50 countries ranked by wealth according the World Bank
• Excluded those with populations of less than three million to
exclude tax havens
• Used all the remaining countries for which a comparable income
distribution measure was available in the UN Human Development
Reports
3
The Spirit Level
• Sources of data: WHO, UN, OECD, World Bank
• Internationally comparable data do not exist for most of
developing world
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How much richer are the richest 20 per cent than
the poorest 20 per cent?
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Source: Wilkinson & Pickett, The Spirit Level (2009)
Link between income inequality and health and social
outcomes
• More unequal countries, such as the UK, tend to score worse than
more equal ones on all health and social indicators
• Where there are high scores in one type of problem, there are
almost always high scores on all the other indices
• This happens even when they are unrelated, for example obesity
and homicide
• This link suggests single underlying cause outside of the
separate health and social issues
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How do countries compare?
• The same countries tended to do well or badly on all the health
and social outcomes analysed
• More positive health and social outcomes - Sweden, Norway,
Demark and Japan
• Less positive health and social outcomes - UK, US and Portugal
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13
Levels of trust are lower in more unequal societies
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Source: Wilkinson & Pickett, The Spirit Level (2009)
How do countries compare overall?
Index of:
• Life expectancy
• Maths & literacy
• Infant mortality
• Homicides
• Imprisonment
• Teenage births
• Trust
• Obesity
• Mental illness – incl.
drug & alcohol
addiction
• Social mobility
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Source: Wilkinson & Pickett, The Spirit Level (2009)
How strong is the correlation?
• Levels of correlation above 0.5 suggest a strong relationship in
social science analysis
• All statistically significant at the 0.05 level
Indicator
Social immobility
Teenage births
Imprisonment
Trust
Mental illness
Obesity
Homicides
Educational performance
Life expectancy
Infant mortality
Overall index
Source:
Correlation coefficient
0.93
0.73
0.67
−0.66
0.59
0.57
0.47
−0.45
−0.44
0.4
0.87
Wilkinson & Pickett (2009) ‘Income Inequality and Social Dysfunction’,
Annual Review of Sociology
Note: A negative sign means that when one variable increases the other decreases
0.05 level of statistical significance means there’s 5% probability that results have
come about by chance)
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Is this a causal explanation?
• Are there other explanations?
Average income
Country size
Ethnic homogeneity
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Is this a causal explanation?
• National income compared with health and social outcomes strong correlation disappears altogether
• No evidence that getting richer as a society will improve health
and social outcomes
• IMF 2010-11 data of how rich countries are, based on GDP
Norway
US
Sweden
Denmark
Finland
UK
Japan
Portugal
4th
6th
13th
20th
21st
22nd
24th
41st
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Is this a causal explanation?
Index of:
• Life expectancy
• Maths & literacy
• Infant mortality
• Homicides
• Imprisonment
• Teenage births
• Trust
• Obesity
• Mental illness – incl.
drug & alcohol
addiction
• Social mobility
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Source: Wilkinson & Pickett, The Spirit Level (2009)
Is this a causal explanation?
• Norway, Sweden and Finland – small countries with good health
and social outcomes
• Singapore and Portugal – small countries with poor health and
social outcomes
• Countries with the largest populations are the US and Japan - at
opposite ends of the inequality spectrum
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Is this a causal explanation?
• Very similar proportion of the population of Sweden and the US
are foreign born
• Spain has larger migrant population than Portugal
• Spain is more equal and has better health and social outcomes
than Portugal
• Ethnic divisions become important when they serve as markers of
social status attracting stigmatisation, prejudice and discrimination
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Is this a causal explanation?
• No other equally compelling explanation than income inequality
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What can we do?
Income differences before tax
• Increase company democracy - employee ownership
• Promote more directors from within companies
• Put employees on remuneration committees
• Legislate for reporting of pay ratios and policies
• Legislate for phased reduction in pay ratios
• Legislate for quotas to redress inequality
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What can we do?
Taxes & benefits
• Stop tax evasion and invest in welfare provision
• End tax havens and invest in welfare provision
• Make taxation progressive
• Provide welfare benefits on universal basis
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Myths about greater equality
Reduction in inequality will affect growth
• World Intellectual Patent Organization
patents per capita for Portugal = 0.6 and for the US = 1.0
patents per capita for Japan = 7.8 and for Sweden = 30.1
• Benefits of economic growth limited for developed countries diminishing returns from growth
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Myths about greater equality
High pay produces better returns
• High director & CEO pay positively correlates with poor
governance, resulting in poorer company performance (High Pay
Commission)
• Narrower pay dispersion positively correlates with improved
organisation performance (Hutton Review of Fair Pay in the Public
Sector)
• Fair pay equates to engaged staff, equates to greater revenue
generation (A Third of a Percent: The gulf between employees’ pay
and chief executives’ pay and the adverse impacts on UK plc)
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What’s the future looking like?
• Shifts towards a knowledge- and service-based economy, and
increases in high-paid and low-paid jobs at the expense of those in
the middle, will continue to 2020
• Changes in employment structure will contribute to an increase in
poverty rates by 2020
• Both the relative poverty rate and the absolute poverty rate will
increase
• Projected changes in employment structure will also lead to
increased inequality in net household incomes between 2010 and
2020, with income growth projected to be higher at the top than at
the bottom
Brewer M et al (May 2012) Poverty and Inequality in 2020: impact of
changes in the structure of employment Joseph Rowntree Foundation
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Why, when the evidence is so strong, is there little
change?
• 2009 Professor Richard Wilkinson presents The Spirit Level
findings to senior policy-makers - HO, CO, DH, PM’s Private Office
• Acknowledged presentation was “compelling and convincing”
• Recognition that economic inequality causes many of the social
problems government tackles
• Acceptance that economic inequality socially damaging, not
translated into significant policy-making
• Career incentives to silencing some evidence to avoid
challenging dominant narratives
• “ … there is some systematic distortion of the use
of evidence in ways that suit the interests of the
powerful social groups that constitute the British
state.”
Stevens A (2010) Telling policy stories: an ethnographic study of the use of
evidence in policy–making in the UK Journal of Social Policy
33
Useful web links
• Rebuttal of critics:
www.equalitytrust.org.uk/resources/other/response-to-questions
• Audio file of discussion with the authors:
www.guardian.co.uk/books/audio/2009/mar/05/the-spiritlevel?popup=true
• Richard Wilkinson TED talk:
www.ted.com/talks/lang/en/richard_wilkinson.html
• Does Income Inequality Cause Health and Social Problems?
www.jrf.org.uk/publications/income-inequality-health-socialproblems
• The shackled runner: time to rethink positive discrimination?
http://wes.sagepub.com/content/24/4/728.full.pdf+html
• Understanding attitudes to tackling economic
inequality: www.jrf.org.uk/publications/
attitudes-economic-inequality
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Useful web links
• Islington Fairness Commission report:
www.islington.gov.uk/DownloadableDocuments/CouncilandDemocra
cy/Pdf/fairness_commission/IFC_final_report_closing_the_gap.pdf
• Society for the Study of Economic Inequality: www.ecineq.org
• Commission on Living Standards: www.livingstandards.org
• High Pay Commission: www.highpaycommission.co.uk
• Inequalities: inequalitiesblog.wordpress.com
• Hutton Review of Fair Pay in the Public Sector:
www.hm-treasury.gov.uk/indreview_willhutton_fairpay.htm
• Poverty and Inequality in 2020: impact of changes in the structure of
employment: www.jrf.org.uk/sites/files/jrf/employment
-inequality-income-full.pdf
• A Third of a Percent: www.onesociety.org.uk
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What we looked at
• The Spirit Level
• Link between income inequality and health and social
outcomes
• How do countries compare?
• Is it a causal explanation?
• What can be done?
• Myths about greater equality
36
The Spirit Level findings and
why they matter
Redistribution of wealth a question of social power
21st May 2012
Sue Christoforou
www.equalitytrust.org.uk
37